Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

SONIC Corporation (NASDAQ:SONC- Free Report) had been crushing it in the burger wars for several years. But this Zacks Rank #5 (Strong Sell) just warned about its fourth quarter results.

Are burgers going out of favor in America?

Sonic is America's largest drive-in restaurant chain with 3500 locations. For over 60 years it has served customers and now sees about 3 million customers a day.

Warned on the Fourth Quarter

On Sep 27, Sonic issued preliminary results for its fiscal fourth quarter which ended Aug 31 and it wasn't good.

Same store sales fell 2% with a decrease of 3% at company owned drive-ins and 1.8% at franchise drive-ins.

The disappointing sales was the result of lower-than-expected traffic, as consumers spent less eating out, and aggressive competition in the burger industry. There are a LOT of burger chains now, all competing for the same dollars.

Still, the company continues to expand. It opened 53 new drive-ins in fiscal 2016.

Estimates Cut

The analysts didn't like what they heard as 8 estimates were cut for fiscal 2016 and 8 were also cut for next year.

The fiscal 2016 Zacks Consensus Estimate fell to $1.29 from $1.33. that's still earnings growth of 17.4% compared to the prior year.

The fiscal 2017 Zacks Consensus Estimate fell $0.10 to $1.41 from $1.51. While you never want to see estimate cuts, it still results in 2017 earnings growth of 9.4%.

Let’s start with the latest news from the U.K. Frosh U.K. Prime Minister Theresa May now says Brexit begins by the end of March 2017.

According to comments published in the Financial Times, whichever way you look at it, things aren’t pretty for the U.K. pound. And the U.K. pound has already hit lows last seen in 1985.

A number of major FX strategists expect things to get messier still—

With a -6% flash crash in hand, I can’t say I disagree with what was written by these pessimistic FX strategists. The U.K. pound is headed lower. But the export sensitivity of U.K. FTSE stocks keeps the share markets there headed higher – for now.

When we see U.K. stocks crash, due to U.K. macroeconomic weakness showing up, then the political tone may well change.

The narrative away from the USA interested me this month, as I looked further into the matter of advanced nation GDP growth stagnation. Check out this writing from USA economists on the West Coast…

Output Growth in Advanced Countries STAGNANT — San Fran Fed

“In particular, [San Fran Fed economists say] output growth in other advanced economies, such as the Euro area and Japan, has been relatively stagnant since the global financial crisis. Foreign inflation has also been subdued in comparison with the United States.

“These differences in economic performance have resulted in diverging monetary policy stances. The United States has begun to normalize its monetary policy and is expected to tighten it more in the future.

“In contrast, the European Central Bank and the Bank of Japan have eased monetary policy further—through more negative rates on reserve deposits and greater quantitative easing—and both central banks are expected to stay very accommodative in the near term.

“This divergence in policy paths has increased demand for U.S. assets by foreign investors seeking higher returns, and further pushed U.S. long-term interest rates down.”

GDPNow Has USA GDP Growth at +2.2% in Q3

The USA is staying only a small step ahead of advanced country GDP growth doldrums, with +2.2% GDP growth forecast for Q3-16. But USA consumer spending is holding up much better. According to the Atlanta Fed’s GDPNow growth tracker on Oct. 5th, third quarter real consumer spending was +2.7% y/y.

On that relatively upbeat note, I found the Zacks Industry Ranks to show lots of medium upgrades -- and no real loser sectors this month.

BHP Billiton is a leader in the global natural resources industry. The Group has high-value and industry-leading positions in aluminum, metallurgical coal, thermal coal, copper, ferro-alloys, iron ore and titanium minerals and also has substantial interests in oil, gas, nickel, diamonds and silver.

STMicroelectronics is a global independent semiconductor company which designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems.

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About the Analyst Blog

Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Resources

Client Support

Follow Us

Zacks Research is Reported On:

Yahoo

MSN

Marketwatch

Nasdaq

Forbes

Investors.com

Morningstar

Zacks Investment Research is an A+ Rated BBB Accredited Business.

Copyright 2016 Zacks Investment Research

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1988-2015 and were examined and attested by Baker Tilly Virchow Krause, LLP, an independent accounting firm.

Visit performance for information about the performance numbers displayed above.